ccccccccccccc

ccc

„
 
„ 

„ 


c
c
cccccccc
ccc
c
c
BULLWHIP
 ITSTINSc

c
c
cccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc
c
c
cccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc c c
ccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc  cc
cccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc
c
c
 c
Bullwhip effect is an effect which describes how Ê




Ê




 




Ê
 
Ê


Ê 
Ê 
Ê

Ê
c
cc

cc 
c c
cservice, high
inventory levels and unrealized profits. The Bullwhip effect is a
phenomenon strictly related to SCM and regards the observed
amplification in order-size variance for upstream nodes in a SC. c
‘ supply chain is a dynamic system that involves the constant flow
of information, products and funds from suppliers to manufacturers
to distributors to retailers to customers along both direction of this
chain.

cc
 

The bullwhip effect is the magnification of demand fluctuations, not

the magnification of demand. The bullwhip effect is evident in a
supply chain when demand increases and decreases. The effect is
that these increases and decreases are exaggerated up the supply
chain. The essence of the bullwhip effect is that orders to suppliers
tend to have larger variance than sales to the buyer. The more
chains in the supply chain the more complex this issue becomes.
This distortion of demand is amplified the farther demand is passed
up the supply chain.
Proctor & Gamble coined the term ͞bullwhip effect͟ by studying the
demand fluctuations for Pampers (disposable diapers). This is a classic
example of a product with very little consumer demand fluctuation.
P&G observed that distributor orders to the factory varied far more
than the preceding retail demand. P & G orders to their material
suppliers fluctuated even more. P&G observed that this product with
uniform demand created a wave of changes up the supply chain due to
very minor changes in demand.

6!  c"#c!$$c%&'c##6 c
wc ver reacting to the backlog orders.
wc ittle or no communication between supply chain partners.
c( c
- Forecasts are inaccurate by nature, so
they always create an unrealistic expectation of demand. When the
gap between forecast and reality is large, this creates the potential
for product shortfalls or excess inventory.The main reason for the
gap is exponential smoothing by which future demands are
continuously updated as the new daily demand data become
available.

"  cc- Companies may place orders in batches, in order

to reduce the cost of processing orders & transportation costs.
Batching also contributes to poor forecasting by spreading up
demand cycles to suppliers.whenever a batch is run Upstream,
companies incorporate this information into their forecasts, creating
the misperception of feedback. Periodic ordering amplifies
variability and contributes to the bullwhip effect.
cc
cForward buying results fi"om price fluctuations
in the marketplace. Manufacturers and distributors periodically
have special promotions like price discounts, quantity discounts,
coupons, rebates, and so on. ‘ll these promotions result in price
fluctuations. Opecial promotions and price discounts result in
customers buying in large quantities and stocking up, inferring erratic
future purchase forecasts.

c
ccc - If product demand
exceeds supply, a manufacturer may ration its products.
customers misinterprete it as product shortage and they often
double order with the expectation that only half of the order will be
filled, producing wrong information on the real demand, that is
twice as great as it actually is, affecting forecasts. ead times is one
of the main factor contributing to the increase in variability in the
SC. ‘s lead time increases, variability increases too. In fact,
calculating safety stock level and reorder point, one multiply
estimates of the average and standard deviation of the daily
customers demands by the lead time. Therefore, a greater lead time
means that a small change in demand variability forecast infers
significant amount in safety stock level, reorder quantity and thus in
order quantity, increasing variability.

6") *!)6 c
c
wc  cc+

c(c
c c
cc
 c

c(ccc
 c,cc

c(cc
c-'cc.ccc
 c
c
 cc c(c(  ccc
c( c/ cc

( c,c'cc.cc (c(cc c
/  c c
c0c c( c(c
0c c( c(c0c/( -c(c(cc
 cc

c(c c
c (
,
wc c cc/( c(c
c c
cc c
/( c(ccc
 c,c (ccc c
/  cc-c'cc.cc(c cc c/c(c
/( cc(
cc 1
 cccc(cc

c,cc 
-c/( c(ccc
 c
c ,c cc/c(c/( c(c c
c (
cc 1
 cc
cc (
c
(c
,c
wc c cc ( (c(cc
c c
cc
 c ( (c(ccc
 c,c c
 ( (c 1
 c(/ ccc'ccc

 c c( ccc(  cc,cc

c(cc
c-c ( (c 1
 c


c c(/ c,c c c
 ( (c(c
c

c ( (c
  cc(ccc(c(/ ccc
 (,c
wc c cc$( c(c( ccc /c
c$(
c
1
 c

cc(  ,c c/ (
cc
/cc((c(c c0c(
c c( c
/ c(
c cc (c(cc

(cc
(  ,c c((c c(c(
c(,c
wc ' ( cc
ccccc cc
/ (
c(ccc c ( cc,c
c